Thursday, 31 January 2013

Singapore’s office rents are set to
rebound from their first annual decline in three years as new
supply shrinks and more businesses expand, according to the
biggest office property trust in Asia outside of Japan.

Rents in the city are reaching a trough and demand may rise
as the country positions itself as a regional business hub, said
Lynette Leong, chief executive officer of CapitaCommercial Trust (CCT),
Supply for the next three years will be about 0.8 million square
feet a year, down from 1.3 million square feet over the past two
decades, she said.

The towers of the Marina Bay
Financial Centre stand in the central business district in Singapore.
Photographer: Munshi Ahmed/Bloomberg

“Rents are poised for a recovery,” Leong said in an
interview in Singapore on Jan. 24. It’s “a no-brainer that
rents are not going to go down very much further so it’s more
when the rents will turn and to what extent,” she said.

Ranked by the World Bank as the easiest place to do
business for a seventh year, the country that’s smaller than New
York City is also emerging as Asia’s wealth management center,
driving demand for banking services with an increase of
millionaires. Singapore office rents are the 19th-highest
globally, according to CBRE Group Inc., and are cheaper than
Hong Kong, Tokyo, Beijing and New Delhi.

CapitaCommercial estimates new demand accounted for 1.5
million square feet to 1.8 million square feet annually in the
past three years, Leong said, without giving a forecast for 2013.

Singapore’s office rents fell 0.3 percent in the fourth
quarter, extending the decline in 2012 to 1.3 percent, the
government said on Jan. 25. They climbed 8.4 percent in 2011 and
13 percent in the previous year, government data showed.

Millionaire Households

The country’s millionaire households expanded 14 percent in
2011, according to a Boston Consulting study. The proportion of
millionaire homes in the city of 5.3 million people was 17
percent, the highest in the world, followed by Qatar and Kuwait.

Additional office space in the past two years came mainly
from the downtown Marina Bay area, with banks including Standard
Chartered Plc and Barclays (BARC) Plc taking bigger offices.

Standard
Chartered relocated from 11 buildings across the city to one
tower in the new office area, while Barclays moved from six to
two in the district.

Average gross rents of prime office space declined 11
percent in 2012 and could fall 5 percent to 10 percent this year,
Colliers International said in a Jan. 25 report. Leasing rates
climbed 14.6 percent in 2011, the property brokerage said.

New tenants took up 1.9 million square feet of space last
year, a 17 percent drop from the five-year high of 2.3 million
square feet in 2011, Colliers said.

Too Early

“It’s still too early to pinpoint a time for a recovery,”
Chia Siew Chuin, director of research & advisory at Colliers,
said in a phone interview yesterday.

“Global economic headwinds
are a concern and there is also a risk of secondary space that
can be returned to the market should occupiers or tenants
relocate to new buildings.”

Singapore’s economy expanded 1.2 percent last year, less
than a quarter of the pace in 2011. Growth is expected to range
between 1 percent and 3 percent this year, based on official
estimates.

The city also became the first in Asia to introduce curbs
on industrial properties. The government on Jan. 11 imposed as
much as 15 percent in stamp duties on sellers of warehouses and
logistics buildings to curb speculation after prices doubled in
the past three years and outpaced the increases in rents.

Rent Stability

“We see stability in rents in the market,” Warren Bishop,
chief executive officer of Raffles Quay Asset, said in an
interview. “Given the amount of supply coming online, I don’t
think it’s going to go down any further. Still, with the overall
economic situation, it’s hard to predict it going up, because we
have to be realistic that the situation in America and Europe is
affecting the world economy.”

Singapore’s office vacancy rate has been falling since it
reached a five-year high of 13 percent in the third quarter of
2010, according to government data. It fell to 9.4 percent in
the fourth quarter last year, the lowest since the end of 2008.

CapitaCommercial said it filled 97.2 percent of its
buildings in the fourth quarter, keeping its vacancy rate lower
than the industry average. The trust, partly owned by CapitaLand
Ltd., Southeast Asia’s biggest developer, increased its
distributable income by 7.4 percent to S$228.5 million ($184.8
million) last year.

The trust, also the biggest office REIT by market value in
Asia after Nippon Building Fund Inc. and Japan Real Estate
Investment Corp., climbed 22 percent in the past six months,
compared with the 8.4 percent gain in the Singapore benchmark
Straits Times Index. (FSSTI) The shares climbed 1.2 percent to S$1.645
in Singapore trading today, snapping a four-day decline.

“A lot of companies are not just dependent on the
Singapore GDP, but more the regional economies,” said Leong,
the trust’s CEO. “And the region still looks fine, so we think
that will drive demand for office space.”
- Bloomberg

Wednesday, 30 January 2013

PUTRAJAYA: Some 100 people, claiming to represent business
associations, held a brief protest against the implementation of minimum
wage for foreign workers in front of the Human Resources Ministry.

A member of the steering committee reads out the group’s demands to the protesting crowd. — Picture by Zurairi AR

The
group, called the Minimum Wages Implementation Steering Committee,
demanded that the Government stick to the current wage level set by the
embassies of the various countries whose citizens work here, and not
hike it up to RM900 as is being done for local workers.

Committee
member Goh Chin Siew said they want the ministry to re-examine the
minimum wage requirements so that they reflect the standard of living in
different areas across the country, and for the Finance and
International Trade and Industry ministries to weigh in on the impact of
minimum wage on Malaysians.

“Malaysians will face hyperinflation
due to minimum wage, and we will also see a lot of money flowing out of
the country when foreign workers remit earnings home,” he said before
the group handed a memorandum on the issue to the ministry.

The
group said they were only against implementation of minimum wage for
foreign workers and not against minimum wage for Malaysians.

During
the protest, the group chanted various slogans outlining their support
for minimum wage for locals but not foreign workers.

They also
held up placards in English, Malay and Chinese, asking why the
Government had not “listened to our voices” and demanding that Human Resources Minister Datuk Seri Dr S. Subramaniam resign for allegedly failing to resolve the minimum wage issue.

Among
the organisations that the group claimed to have secured as members are
the Malacca Chinese Assembly Hall, Malay-sian Furniture Industry
Council, KL-Kepong Business Recreation Club and Electrical Electronics
Association Malaysia.

Tuesday, 29 January 2013

IN this penultimate column, I would like to explore the world of
romance, courtship and partnership. Why some marriages are happy and
long lasting and why some end in a messy divorce. I will also talk about
quickie engagements, marriage of convenience and spouse for hire.

No,
I am not Aunty Thelma providing counsel on your turbulent personal
life. Neither am I qualified to talk about politicians and rent seekers.
This discussion is confined to entrepreneurs who need partners to help
them kick start their business. Occasionally, desperately sourcing
capital for survival and sometimes needing a healthy dose of cash
injection to grow.

For new startups, courting the investors will
be the most stressful stage. Before they part with their money, they
will question the viability of your business, sustainability of your
business model and most importantly, the potential to scale. You are
advised to be well prepared with facts and figures supporting your
proposal. If a knowledgeable investor tears up your assumptions and
forecast, swallow your pride and rebuild your model if necessary. You
will be better prepared to face the next potential investor.

Knowing
the type of investors that you would like to “sleep with” will save you
unnecessary stress and avoiding misaligned discussions. Short-term
investors think very differently from long-term investors. Temporary
relationships means moving in together and having fun without any
responsibility. Breaking up is not hard to do.

Long-term
relationships requires patience, understanding and tolerance between
both parties. Like all marriages, there will be fights and
misunderstandings but both sides will make up and continue for the sake
of the children, albeit on an uneasy truce.

If you have a quick
turnaround project with an early exit plan, then you will click
immediately with short-term investors who will be willing to take on
higher risks but expecting immediate returns on invested capital.
Normally they do not mind having a smaller equity share as long as they
see good upside but you will have to pay interest or dividends on their
different class of preferred shares. It is best you find out more on
terms like convertible cumulative preferred stocks and RCCPS (redeemable
convertible cumulative preference shares) etc ... If you want to be on
the same page as these savvy investors.

If your project has a
long gestation period, get a rich investor who looks for steady
recurring income with an eye for capital asset growth. Be conservative
with your forecast and highlight your cashflow management skills.
Nothing pleases the long-term investor more than having a mature
thinking partner who will conservatively build a meaningful asset
business in a steady environment.

Once you have the investor
interested, the real negotiation starts. Assuming all investors are
fools, you will be able to load the investors with a high valuation,
retain majority equity and management control and yet raise a lot of
capital by giving little away. Alternatively, assuming you are the
desperate fool, you would end up working for the new investors, saddled
with a low valuation and stuck with minority equity stakes. Nobody likes
playing the fool so either one of these relationships will definitely
end up in divorce.

Basically, the whole negotiation rests on the
basis of valuation. For a new startup with no prior track record, the
valuation is based on forecast budgets normally over a five-year period.
To investors, getting the forecast right determines the level of risks
to be taken. But his guess is as good as your guess. Then you end up
with two sides articulating their understanding on market trends,
benchmarking best practices etc, just to justify their number guessing
skills.

So the final numbers to be agreed upon will depend
heavily on your negotiation skills or how much the Investors believe in
you. If you are desperate, the Investor will see through that and you
will not be negotiating from strength. A right minded investor would
prefer to have a highly motivated entrepreneur at the controls of a
start up so you will not be forcefully bullied. Just remember to tell
him that you need to feel motivated when you wake up every morning and
he will back off and see that you are fairly treated.

If the
Investor pushes you into a corner, just walk away. You have not lost
anything. That said, I assumed you have been realistic with your
forecast numbers and have comfortably addressed the investors concerns.
If not, do not be surprised if the investor walks away instead.

Understanding
how investors think will help you prepare your proposal. Greedy
investors look for maximum short-term returns and these are normally
fund managers who wants to believe in well structured glossy
presentations so that they can justify to their investors why they
should invest their money into your project. It will be unfair for me to
say that these professional fund managers are willing to invest in high
risk projects since it is not their personal money but the pressure to
perform forces them to take higher risks that carries higher returns.

Individual
investors are way too careful and they prefer proposals with reduced
risks and long-term asset building models. This has been my preferred
business model as an entrepreneur then and even now as an investor. But
the lure of fast short-term gains enjoyed by so many has whetted my
appetite and I am now reconsidering my investment strategies. Greed is
indeed sinful and irresistible.

Since I made a promise not to
write about politicians and GLCs (government-linked corporations), I
will not be elaborating on the topics of quickie engagements and
marriage of convenience. I apologise if you have found this column dry
and boring but I hope my advice on having safe sex in a monogamous
marriage will help you live longer with a healthy bank balance by your
side. Stay happy always.

Monday, 28 January 2013

Non-governmental organisations (NGOs) have pointed out
that the state still has no government shelter for the homeless and
needy, even though Penang has a large number of homeless people.

According to NGO volunteers, there are only two free-of-charge stay-in shelters in the state and these are run by NGOs.

The volunteers claimed that the DAP-led state government had promised
to build a shelter when it came to power in 2008, but nothing had
materialised so far.

As a result, hundreds of homeless people could be found at public
places, such as bus stops, five-foot ways, under bridges and on
pedestrian crossings, according to P. Muru¬giah, coordinator of the
Temple of Fine Arts' Klinik Derma Sivasanta.

He said that half of the 70 or 80 needy patients treated by the charity clinic twice a week were in fact homeless.

"The Government needs to build a shelter for the homeless and provide medical care for them," he told The Star Online.

Murugiah said his clinic had even collected and cremated 40 unclaimed bodies last year.

He suggested that Penang had a high number of homeless people because
the state was densely populated with many senior citizens, and some of
these were neglected by their children.

A volunteer at Kawan, a drop-in centre for the homeless and needy,
said homeless people were made up of vagrants, the mentally-ill, drug
addicts, as well as unemployed youths from other states.

"Half of them are those aged 50 and above and illiterate," said the volunteer, who gave his name as James.

"There is a sizeable number of elderly people and the government needs to set up a shelter quickly."

A doctor in George Town, who declined to be named, told The Star Online that the federal government should step in to solve the problem.

Once again, the disadvantaged sections of society have received no
help from Guan Eng's administration, forcing the Barisan Nasional
government to step in to help Penangites.

If it was affordable housing earlier, this time it is shelters for
the homeless. Either way, the federal government has always carried out
its responsibility to the people whereas the DAP-led state government
has been found wanting.

Sources: thechoice.my

Penang homeless need shelter

I STRONGLY support the call by various NGOs for a shelter for the homeless and needy in Penang.

Many
of these homeless people sleep on corridors outside shops and temples.
Some sleep in sheds and bus stops during the night, and try and get some
work during the day.

The elderly and sick end up in hospitals
and refuse to leave the wards when they are discharged because they have
no home to go back to.

The state Welfare Department’s regular
beggar raids cannot ease the situation because only those without
serious medical problems and are above 60 years old can enter
government-run old folks home.

The rest of the homeless go back to the streets because they cannot afford to rent rooms.

It
is high time that the Federal and state governments work with NGOs in
Penang to identify a place and start this service. The authorities need
to provide support and allocate funds, and not let NGOs run shelter
homes in the name of charity.

These shelter homes must also have trained social workers and volunteers.

As
Penang strives to retain its modern and heritage status, social service
for the needy and disadvantaged groups must always be part of the plan.

Sunday, 27 January 2013

ACCOUNTING is a subject that most people dread, for fear of its dry
and lengthy text. Nonetheless, it is of utmost importance in the
business world for without it, businesses would have no proper and
standardised system to run on.

Having studied the subject at high
school, which then led to graduating with a bachelor's degree in
accounting and finance, I have to admit that the subject was not one of
my favourites. I was one of those, mentioned earlier, who feared the
subject because of its lack of obvious colour.

At university, I
took a paper on financial accounting principles, which included the
study of financial reporting standards. Trust me, it was one where my
memory skills were tested and fully put to good use.

Don't get me
wrong. It's not that I didn't like the subject at all. It was
probably more of a frustration because I lacked the understanding then. I
only truly began to understand it when I started my working career.

The
Malaysian Accounting Standards Board (MASB) enforced the International
Financial Reporting Standards (IFRS) created by the International
Accounting Standards Board (IASB) last year. As a result, many companies
had implemented IFRS as at January 2012.

Although most have not
been burdened too much by the change, several parties are dealing with
issues of implementing the IFRS as doing so would result in a huge
variance in financial reporting.

The implementation of IFRS has
left both property developers and plantation operators in a sticky
situation. Both parties' issues have to do with International Financial
Reporting Interpretation Committee (IFRIC) Interpretation 15, and IFRS
13.

IFRIC Interpretation 15 deals with revenue recognition, and
under this interpretation, property developers would recognise revenue
only upon completion and handover of the properties to the buyers. This
is different from the more common method of revenue recognition used in
Malaysia, which is the sell-then-build method.

This could gravely
affect the smaller developers that have less construction projects,
which would take several years to complete.

Then, there's IFRS 13
which is the standard dealing with fair value measurement. If
implemented, it could mean that the fair value of land for
non-plantation use could be higher than the fair value of the same land
with existing crops on it.

Technically, the result would be that a
zero value is assigned to the agricultural crops on the land. This is
due to the interaction between IFRS 13 and International Accounting
Standards 41, which allows a residual approach in fair value
determination of land and assets. At times, the best use for the land
varies from its current use, which means that using a residual approach
could result in a minimal or zero value given to the crops.

The
MASB has given property developers and plantation owners until January
2014 to implement IFRIC Interpretation 15 and IFRS 13 in view of the
issues that will arise if it should be implemented now.

Meanwhile, the issues have been raised to the IASB and the IFRS Interpretations Committee.

Seeing
that there's still some time for a compromise to be reached, let's keep
our fingers crossed that an amicable arrangement can be achieved.

STANDARDISING and simplifying housing loan documents is a step
forward. Kudos to Pemudah (Special Taskforce to facilitate business), Bank Negara
and the Association of Banks in Malaysia (ABM). It will be an excellent
move to reign in the rogue banks, financial institutions (FIs) and
development financial institutions (DFIs).

The National House
Buyers Association (HBA) views the recent standardisation of loan
agreements for housing loans below RM500,000 positively. For many years,
HBA has been calling for greater protection for house buyers when they
buy from developers and for borrowers when taking a housing loan.

As
a typical housing loan ranges between 20 and 30 years, borrowers are
stuck with the terms and conditions (T&Cs) of the housing loan for a
long time. Unfortunately, most borrowers do not really understand the
T&Cs of housing loan, as:

(i) The loan agreements are lengthy, running between 20 and 30 pages;

(ii)
They are filled with legal terms and jargon that even borrowers with a
law degree will still need their legal dictionary for reference.

Even
for borrowers who are law-savvy, the loan agreement is a one-way
traffic; the borrower must accept all the T&Cs or find another bank,
as the banks will not vary any T&Cs. However, the scenario is the
same for all banks and borrowers are at their mercy. (banks in this
context includeFIs and DFIs).

Another grave injustice is that the
cost of legal fees for the said housing loan is borne by the borrower
although the lawyer is in fact, representing the banks and on its panel,
and is in no position to advise the borrower. The borrower will be
required to appoint his own lawyer should he require any legal advice.
But this will be futile as banks will not agree to vary any T&Cs of
the loan agreements.

Standardised Loan Agreement

HBA
has been urging banks in Malaysia to be fair and transparent in their
dealing with borrowers. Hence, credit must be given to “participating
banks” for finally agreeing to adopt a standardised template for housing
loans with simplified language which is easy for the layman to
understand.

Based on our quick analysis of the Standardised Loan
Agreement which can be downloaded from the website of the Association of
Banks in Malaysia (www.abm.org.my),
the agreement does appear to contain less legal jargon and is written
in a manner which is easier for the borrower to understand.

The
agreement also does away with unnecessary and ridiculous restrictions
that certain bank previously impose on borrowers taking housing loans,
such as:

● Borrowers cannot rent out the property without the consent of the banks;
● Borrowers cannot undertake any renovations without the consent of the banks; and
● Hidden clauses which impose various hidden charges and penalties such as late payment charges on borrowers

Based
on our preliminary assessment, HBA views the agreement positively and
we urge the banks and Bank Negara to further improve on the following
areas:

Remove the RM500,000 cap

HBA calls for the
RM500,000 limit for the Standardised Loan Agreement to be removed. This
agreement should be applicable for all housing loans regardless of the
amount, as the nature of the housing loan is the same. Already, most
landed properties in areas such as Puchong and Kota Damansara are in
excess of RM500,000. Even strata-properties in locations such as Bandar
Utama, Ara Damansara are already in excess of RM500,000. Why not extend
the coverage to all housing loans per se?

All industry players must adopt the standardised loan agreement

It
would appear that the standardised loan agreement is being used by
certain participating banks on a voluntarily basis and not all
commercial banks which give out housing loans are adopting this
agreement. Why is this the case? Bank Negara should compel all
commercial banks to adopt this standardised agreement. In addition,
non-banking Institutions that give out housing loans, such as DFIs,
insurance companies must also be compelled to adopt the agreement. Why
shouldn't the house buyers offered similar protection here?

Non-members of ABM such as DFIs include Bank Islam, Bank Muamalat, Bank Rakyat, Agro Bank, Bank Industri, Bank Simpanan Nasional and EXIM Bank which are formulated under their respective legislations.

Remove unnecessary fees and charges imposed on borrowers

Certain
banks currently impose unnecessary fees and charges on borrowers when
they request for bank statements which are needed when sthey want to
settle/refinance their housing loans, or when making EPF withdrawals to
reduce their housing loans. While the fees of up to RM50 may not seem
much to some people, it still is an exorbitant amount as it cost banks
next to nothing to produce such statements. Moreover, it is the
borrowers' right to settle/refinance the loan and/or to make EPF
withdrawals to reduce their loans. A bank statement showing the
principal sum outstanding is required to facilitate such transactions.

By
imposing fees of up to RM50 to prepare such simple statements, banks
are blatantly taking advantage of their customers as they have no choice
but to pay the charges just to ensure that the transaction goes
through.

HBA is calling for banks to be prohibited from charging
fees for these statement to facilitate repayment, refinancing or to make
EPF withdrawals to reduce their loans. Some Banks are already charging
RM10 for “reprint” of a bank statement on current accounts. Can you
imagine a situation where the customer has not received his monthly bank
statement for whatever reason and has to pay RM10 for a “reprint” of
his own bank statement?

Banks can unilaterally vary theinterest rate

However,
upon closer inspection of the standardised template, HBA noticed that a
clause currently found in most housing loans has been carried forward. .

Even
if the borrower had faithfully paid all his dues and installments' on
time, the bank is entitled to vary the interest rate unilaterally at any
time during the loan tenure. There is no such thing as sanctity of a
binding contract between the borrower and the banks.

As we know,
the current interest rates for housing loans are competitive, with some
banks willing to go as low as BLR less 2.50%. So, what this can mean is
that a few years down the road, when the banks realise that such low
interest rates are no longer feasible, they can vary the interest rate
from say BLR less 2.50% to BLR PLUS 2.50% and the borrower is obliged to
pay the new interest rate. Furthermore, if the previous installment was
only RM1,500 a month and the new installment due to the revised
interest rate is RM2,500, the borrower must pay the new rate or risk the
bank repossessing his house.

HBA urgently calls for Bank Negara
to repeal this clause to prevent banks from having the upper hand to
victimise unsuspecting borrowers. Banks must not be able to unilaterally
vary the interest rate if the borrower had not defaulted on his
obligations' under the loan agreement. Banks may say that they will not
normally invoke/exercise the said clause. But, covenanted terms and
conditions are binding upon both parties.

Lawyers have to purchase standard forms from banks

Nowadays,
law firms undertaking banks' work have to purchase standardised
pre-printed forms from banks. The price ranges from RM150-RM350. Would
printing cost be so expensive or are banks making a profit or “mark-up”
from such sales to law firms?

Such “expenses” are nevertheless
passed down to customers/ borrowers as disbursements. Couldn't a “soft
copy” be made available to law firms to adopt and print at their own
cost and expense? Printing charges are only limited to RM50 as approved
by the Bar Council.

Apportionment of payment to interest and principal shrouded in secrecy

Another
grave injustice to borrowers is the allocation of monthly installments
towards the settlement of principal and interest as this is not
disclosed anywhere in the Loan Agreements' or even in the Standardised
Template.

To illustrate a real life example, we had a complainant
who took a 20-year housing loan about six years ago. After diligently
paying his loan for five years, the complainant assumed that the
principal amount outstanding should only be about 75% of the original
amount. Unfortunately, the complainant had personally experienced, the
amount was closer to 83%.

There need to be greater transparency
on how the allocation of monthly repayments for interest and principal
is done and this must be disclosed in the loan agreement. Moreover, the
allocation must be done on a “straight line basis” so, after paying five
out of a 20-year housing loan, the principal outstanding must be 75% of
the original amount.

Conclusion

HBA calls for
banks to continue to take cognisant of their borrowers' hardship and
protect the interest of their borrowers instead of just focusing on
profitability. Without the borrowers and customers, banks will not have
any profits to show.

HBA also calls on Bank Negara to continue
the close monitoring of banks to ensure that they do not take advantage
of borrowers. The battle of borrowers against banks is akin to David vs
Goliath. Timely intervention from Bank Negara is needed to balance the
scale of power.

BUYERS BEWAREBy CHANG KIM LOONG

Chang Kim Loong is the honorary
secretary-general of the National House Buyers Association, a
non-profit, non-governmental organisation purely manned by volunteers.
You can log in to www.hba.org.my

Saturday, 26 January 2013

BEING a parent is a challenging job. It's a job that requires
lifelong commitment, and you cannot resign from it even if you feel you
can't cope. And what's more, parenting requires skills that are not
obtainable from school, college or university. Parenting and managing
money are the two most important skills that we learn from our parents
or adults with whom we grew up, be they our grandparents, nannies or
guardians.

As you go through the process of considering how to
communicate with your parents and siblings about managing family wealth,
you will realise the need to teach your children about money so that
you are able to leave your own legacy behind for your children to
communicate and manage money harmoniously as a family.

There is
really not one proven or standard method of parenting and teaching
children about money because of different personalities, behaviours and
attitudes. We teach children about money based on how we were taught
about money by our own parents or guardians, and from the environment in
which we were brought up. Recall your childhood days, and how your
parents taught you about money. Were you taught to save your pocket
money or to spend it wisely?

Think about the environment you grew
up in. Were there times when your parents had money problems and you
often heard them argue about it? Or did your parents hide the fact that
money was hard to come by in the family? Or were you pampered by your
parents with toys, clothes and going out for fun activities and
holidays?

Some parents have told me that because of the poverty
they experienced during their own childhood, they now try their best to
give their children a better life by lavishing them with the material
goods and experiences that they themselves never had. By indulging their
children, they are not allowing their children to experience financial
responsibility.

Different parenting styles

While
most parents learn parenting skills from their own parents or by
observing others, they will accept some practices and discard others.
Effective parenting requires interpersonal skills that can create some
emotional demands. Experts in early childhood development say an
important dimension of parenting is the style parents adopt when they
interact with their children. According to Maccoby and Martin's
parenting style typologies, there are four different parenting styles.
Depending on the child's character, different parenting styles lead to
different results:

1) Authoritarian parenting is a restrictive,
punitive style in which parents exhort the child to follow their
directions. The authoritative parent places firm limits and controls on
the child, and allows little verbal exchange. These parents tend to be
very strict and may control the children by limiting their wants and
desired wants. In this case, the children may either grow up to rebel'
by spending beyond their financial means to fulfil their childhood
desires, or they may become very good at managing their money.

2)
Nurturing parenting is a style that encourages the child to be
independent but still places limits and controls on the child's actions.
Extensive verbal give-and-take is allowed, and parents are warm and
nurturing towards children. These parents often communicate and teach
their children to spend their money wisely by explaining to them the
importance of money.

3) Neglectful parenting is a style in which
parents are uninvolved in the child's life. Children whose parents are
neglectful often develop a sense that other aspects of their parents'
lives are more important than they are. Children who grow up in this
environment are often deprived of parental love and a sense of belonging
in the family. As a result, they may grow up spending lots of money to
fulfil their need for love from friends, and from their life partner. Or
they may spend money to boost their self-esteem because of the lack of
parental love.

4) Indulgent parenting is a style in which parents
place few demands or controls on the children. These indulgent parents
will let their children do what they want. Children with indulgent
parents may often be spoilt by a variety of material things or an
impressive lifestyle. The spending behaviour of indulgent parents may
condition the children to spend more than they need or more than they
can afford when they grow up.

Imagine a situation where the
father is indulgent towards a child and provides gifts, toys, fun and
pleasure, while the mother, on the other hand, is a disciplinarian with
strict rules about gifts, toys, fun and pleasure. Who will the child
prefer to be with, and who will the child learn more from? You and your
spouse should decide on a best way to handle your children's money
expectations. It is important to be consistent and fair to lessen
potential family strife.

Communication

According to
experts of child psychology, even from a tender age of 2 or 3 years
old, a child learns by observation, and from conversations and
experiences they have with adults. Hence, effective parenting warrants a
tremendous amount of proper learning methods and communication skills.
Understandably, today's parents are faced with more issues compared with
their parents; the fact that today's younger generation is growing up
in an era of media influence, technology advancement and the Internet
makes parenting an even more challenging job.

It can be painful
for parents to discipline and teach children about saving money,
particularly when their children are easily influenced by their friends
even as pre-schoolers. This is further compounded by the barrage of
advertisements on television and online media that tempts your children
with attractive toys, pretty clothes and accessories.

It does not
really matter how much money you have or how much joy you derive from
showering your children with material things. As parents, you have got
to show some restraint and boundary. You don't have to feel guilty about
scaling back on spending for your children. Your children may already
have more than they need more clothes and shoes than they can wear, toys
and games than they have time to play with.

Be mindful that
while you are conscious of good money habits for your children, you need
to ensure that your children's grandparents, godparents, aunties,
uncles, or other adults around them do not indulge them too much with
gifts. This may send your children the message that if they cannot get
what they want from you, they can get it from them.

Family values

In
some situations, a couple may bring different views and values about
money and parenting to the marriage. Because of personality, character,
family and life experience differences, couples do face conflicting
personal and family issues where money is concerned. Therefore, teaching
a child about money really begins with teaching your child about the
importance and meaning of life values as a family.

Honesty,
integrity, teamwork, helpfulness, trust, love, family support,
accountability, unity, filial piety, commitment, communication, sharing,
spending time with parents and siblings are some of the most important
family values that your children ought to know, even if they may be
younger than six years old.

Constant messages to your children
about how good family values are important in life, and that money
cannot buy such values, are more important than parental love expressed
in the form of material things for your children.

Teaching them important life values and let them know that money is a means to an end, and not for self-gratification.

Other
than sending them to school to gain knowledge and social skills, the
money skills that you teach your children from an early age are the most
important life education you can provide them with and it actually
starts at home. It is as simple as how you and your spouse manage money
and communicate about money at home. Your good money skills will rub off
on your children.

May this be your new resolutions for teaching your children good money sense!

MONEY & YOU By CAROL YIP

Carol Yip, founder of Abacus For Money, believes that if people
understand their money mindset, behaviours and money psychology, they
can be financially happy and successful. She actively promotes financial
literacy and intelligence within families and for women, youths and
retirees.

Friday, 25 January 2013

PETALING JAYA: Competition for fixed deposits (FDs) is set to continue as banks
eye new liquidity by offering better interest rates to depositors
following the postponement of the Basel III liquidity requirement rules.
Industry analysts said banks would also likely optimise their lending
ability moving forward.

Ambrose: ‘Malaysia has a well-functioning banking system while Europe does not and the US barely does.’

“It's not good to be too conservative in
lending. It is important for the overall economic wellbeing of the
country and it gives life to businesses, bringing prosperity to the
country,” said a banking analyst from one of the four largest local
banks by asset size.

According to Gerald Ambrose, the managing director of fund management company Aberdeen Asset Management Sdn Bhd,
the stricter Basel III requirements to ensure banks are well
capitalised may not be too suitable for Malaysia which presently has a
well-functioning banking system.

“Malaysia has a well-functioning
banking system while Europe does not and the US barely does. I think
capital requirements that are too strict may potentially stifle economic
activities,” Ambrose told StarBiz over the telephone recently.

Commenting on recent banking statistics, RHB Research
in a recent note said the November 2012 system statistics showed loans
growth had eased to 11.2% year-on-year (y-o-y) from 11.8% y-o-y growth
in October 2012.

“The slower pace of growth was attributed to
higher repayments during the month, partly mitigated by stronger
disbursements. Meanwhile, household loans continued to expand at a
steady pace of 11.6% yoy,” RHB Research analyst David Chong said in the
report.

Chong noted Nov 2012's total system deposits grew 11.3%
yoy with this growth being broad based' with loans to deposit ratio
unchanged month-on-month (m-o-m) at 81.6%, the system core capital ratio
was at 13.4% and risk-weighted capital ratio stood unchanged m-o-m at
15.3%.

According to Alliance Research banking analyst Cheah King
Yoong, these statistics showed the domestic banking system remained
“well capitalised” and “resilient to withstand unanticipated shocks to
the financial system, if any.”

Cheah added that lending
activities did not pick up towards the end of 2012 which could be due to
both lenders and borrowers turning cautious with the impending general
election which is widely expected to be held in March.

“We
reiterate that there could be two potential de-rating catalysts, which
pose downside risks to our 7-9% loan growth forecasts for 2013.

“These
are (that) lending activities could decelerate in the first quarter of
2013 with slowing corporate loan disbursements and consumers turning
cautious pending the upcoming general election,” Cheah said.

“Post-election,
should the federal government implement (the) goods and services tax,
resume its subsidies rationalisation programme and raise the electricity
tariff to close its budget deficit; these fiscal tightening policies
could have an adverse impact on consumer spending and consumer loans in
the later part of 2013,” he added

Thursday, 24 January 2013

IBM, the world’s largest technology services company, reported
fourth-quarter earnings and revenue that beat estimates on the back of
growth in emerging markets.

It gave a better-than-expected 2013 outlook after a solid fourth quarter
that analysts say has more to do with Big Blue's smooth execution than a
vibrant tech spending environment.

Companies had been widely expected to hold back on IT purchases in
December in part because of worries about the so-called US fiscal cliff.

Automatic
tax increases and spending cuts would have been triggered had Congress
not made a deal to avert the cliff and could have pushed the weak US
economy into recession.

But IBM said on Tuesday that its
quarterly results beat forecasts and it planned to achieve earnings of
at least US$16.70 a share for the full year, above analysts' consensus
forecast of US$16.57.
.
While some analysts said IBM's earnings
might be a sign of an improved tech spending environment, others said
the strong results were specific to IBM's business model.

“IBM is better positioned in a tough environment than most tech companies are,” said Cindy Shaw, managing director at Discern.

IBM
made a bold strategic move a decade ago when it bought
PriceWaterhouse's consulting business and then decided to exit the PC
business, betting its future was in finding solutions to business
problems with the help of software and technology.

That strategy appears to have paid off.

“What
IBM does better than anyone, with the exception of Accenture, is
solving problems and I am not talking about taking out some costs, but
really driving revenue,” Shaw said.

In addition, she said, IBM
was strong in “hot growth markets” such as data analytics, cloud
computing, emerging markets and what IBM calls smarter planet, which
aims to improve areas such as traffic, power grids and food production.

Sterne Agee analyst Shaw Wu agreed, saying the success appeared to be more specific to IBM than the industry in general.

“The
results show that the IBM advantage and business model vertical
integration of hardware and software is difficult to replicate,” he
said.

“IBM has been doing this the longest and customers are very
accustomed to it. They have a much stronger offering and brand name.”

As
a result quarterly net income rose 10% to US$6.1bil, or US$5.39 a share
from US$4.71 a year earlier. Revenue dropped 1% to US$29.3bil due to
the sale of its retail business in the third quarter.

Analysts
had expected the Armonk, New York-based company to report net income of
US$5.95bil, or US$5.25 a share, on revenue of US$29.05bil, according to Thomson Reuters I/B/E/S.

Revenue grew in particular because of an 11% increase in IBM's growth markets in Brazil, India, Russia and China.

Software revenue was up 3% in the quarter. Reuters

Some analysts said IBM's better than expected results were a sign that tech spending might not have been as bleak as expected.

”It is better than what people had feared,” said Brian Marshall, an analyst at ISI Group.

”Virtually
every segment did a little bit better than people expected. It supports
the fact that things are getting better out there at least from a tech
industry standpoint.”

Andrew Bartels, an analyst with research firm Forrester Research,
said: “We were expecting a lot of companies were sitting on their
wallets until it became clear what was going to become of the fiscal
cliff.

”Given the fact it's Q4 with a cloud of the fiscal cliff,
it's a positive indication that tech software will be doing better in
the next couple of months.”

IBM shares rose more than 4 percent to $204.50 after closing at $196.08 on the New York Stock Exchange.- Reuters

DR Mohd Farid Mohd Shahran of Ikim in “When the world of politics is devoid of ethics” (The Star Jan 22 - See the attachment) believes there is still room for ethics in politics.

In the real world, especially in developing countries, the ethics of Plato and al-Farabi are only good for an utopian society.

While man is not born power crazy, those who enter politics are goaded by power to resort to unethical means.

Morality is hard to preserve and practise in politics.

English philosopher Francis Bacon said: “It is hard and severe a thing to be a true politician as to be truly moral.”

Unethical behaviour seems to be the order of the day as the general election looms near.

Almost
everyday we read of mudslinging on both sides of the fence. Everything
under the sun is being politicised as the stakes are very high.

French
philosopher Voltaire remarked: “The pleasure of governing must
certainly be exquisite if we may judge from the vast numbers who are
eager to be concerned with it.”

Had Voltaire been alive today, he
would qualify his statement by saying, “It is not so much the pleasure
of governing, but the power that comes with it, making the vast numbers
who are eager to be concerned with it.”

As Dr Farid said:
“Politics, in its true meaning, is praiseworthy”. But the “realpolitik”
meaning is different. Mao Zedong once said: “Power comes from the barrel
of the gun”.

Jonathan Swift said: “Politics as the word is understood, is nothing but corruption.”

Despite
the negative connotation of politics in its general form, politics as a
profession can have high ethical values if the very system in which
politics arise have strong values as seen in most developed countries.

Singapore
is a shining example where the ruling party has great difficulty
finding candidates to stand for elections as the people do not see it as
a way to become rich overnight.

Singaporean politicians are known to observe and practice the highest ethical principles as espoused by Plato.

The
observance of ethical political principles in Malaysia still has a long
way to go as noted by Dr Farid where “small issues can potentially be
magnified into a big scandal.”

“The various issues raised by
political parties range from major ones such as fair economic
distribution and political justice, to the most trivial or personal
matters such as the way leaders and their family members dress”.

So
far, general elections in Malaysia, unlike in some developing
countries, have not resulted in the use of heavy weapons to gun down
people.

And when the election results are announced, people
accept it in good faith and continue with their daily chores while
waiting for the next general election. Meanwhile, they hope the party
that won will honour its manifesto.

One of America’s founding
father’s Thomas Jefferson said: “I have no ambition to govern men. It is
a painful and thankless office.” Thomas Jefferson was a man of high
ethical values.

Do we have men like Jefferson in Malaysian politics?

Certainly
there are many men and they should be given the task of providing true
leadership along the political principles of Plato and al-Farabi.

By HASSAN TALIB

When the world of politics is devoid of ethics

Much too often, personalities are the biggest casualties as they
are ruthlessly tarnished. All the dirt and grime is dug out and paraded
for the nation to see despite their many prior good contributions.

WITH the general election around the corner, the heat of the Malaysian political climate is gradually increasing.

The number of political gatherings, ceramah and demonstrations by political parties multiply by the day and continue to increase.

The
various issues raised by political parties range from major ones such
as fair economic distribution and political justice, to the most trivial
or personal matters such as the way leaders and their family members
dress.

It looks as if Malaysians have become a very conscious lot
concerned over everything overnight. Small issues can potentially be
magnified into a big scandal.

Not only is the intensity palpable within ceramah
and gatherings, a similar tone is also evident in cyberspace where
heated debates and exchange of views have overwhelmed the social media
such as blogs, Facebook and Twitter.

While such a phenomenon is regarded as normal, the negative culture attached to it is best eschewed.

To
render support for one’s own party, some leaders and fanatical
followers would resort to unethical means such as making false claims
and unfounded allegations that include character assassination.

In
response to such accusations, the opposing parties will stage similar
counter attacks. As a result, emotions simply overrule reason causing
the situation to get out of hand.

Understandably, the principle
that guides extreme political groups is that politics is a war in which
all kinds of weapons must be deployed to exterminate the enemies.

In engaging power politics, the prince, says Machiavelli, must be “adaptable and know how to do wrong when he must”.

Naturally, such an approach will have a more divisive impact on society.

People become more divided and emotions override everything else, particularly level-headedness.

Much
too often, personalities are the biggest casualties as they are
ruthlessly tarnished. All the dirt and grime is dug out and paraded for
the nation to see despite their many prior good contributions.

Thus,
questions remain: Is this the way politics serve its purpose in
administering human life? Must society undergo this unhealthy process to
elect a leader? Must we necessarily be divisive before arriving at
political maturity when the amount of damage done is irreparable?

The answer lies in how the meaning of politics should be properly understood.

More importantly is the understanding of the role of ethics in political activities.

Politics, in its true meaning, is praiseworthy.

Philosophers
and political thinkers as early as Plato, through his idea of the
“Philosopher King”, had proposed a political system where wisdom and
virtues must be the bases of governing states.

Although his idea
is also criticised as utopian, the principle that Plato tried to put
forward is very important, that is, a true political system must be
guided by knowledge and virtue reflected primarily in the character of
the leaders and politicians.

In other words, ethics, according to Plato, must be the basis of politics.

Just
as men must live virtuous and good lives, a state must also be built on
strong ethical ground. If the state is unfavourable, says Plato, the
individual citizens would find themselves unable to lead a good life as
it should be lived.

This organic relationship between ethics and
politics from Plato stemmed from his idea that a state must be a
microcosmic reflection of man. Since a state is run by humans who need
to be furnished with good ethical virtues for him to be good, a good
state must also be refined with virtuous characteristics.

Echoing Plato is al-Farabi, a celebrated thinker from the Muslim tradition whose work, The Opinions of Inhabitants of the Virtuous City, underlines that a state should be properly ruled by virtuous leaders and followed by virtuous people.

“The
excellent city resembles the perfect and healthy body where all of
whose limbs co-operate to make the life of the animal perfect and to
preserve it in this state.”

Among the qualities needed by a
ruler, according to al-Farabi, are intelligence, good memory, keenness
of mind, love of knowledge, moderation in matters of food, drink and
sex, love of truthfulness, magnanimity, frugality, love of justice,
firmness and courage.

Arguably for some, real politics can never take ethics as its principle.

Such a view is justified if only man is naturally born with the attribute of being power crazed.

However,
this has not been so since man was created by God in the best of mould
as affirmed in the Quran: “Verily we have created the human being in the
best of form.”

Furthermore, mankind can take pride in some of
its leaders and rulers with good qualities and virtuous characteristics
decorating its history. In Islam, for example, Prophet Muhammad and the
four-guided caliphs continue to be revered as leaders par excellence for
all Muslims. Another outstanding and exemplary leader at a later period
was Umar Abd Aziz whose short rule, nevertheless, left a tremendous
impact.

So rigid was Umar’s standard of ethics that he was said
to have even refused to use up the candle in his office to light the
room when discussing personal matters.

In sum, while we all can
agree and understand Einstein when he said, “Politics is more difficult
than physics”, we hope that, just as physics has contributed immensely
to benefit the life of the human kind, politics would be able to do
likewise.

On Ethics and Politics :Is man not capable of love if he embraced the morality of
self-interest? Only the man who loves himself and who knows his values
is capable of loving others, albeit not indiscriminately.

In the Asia-Pacific region, Morgan Stanley Real Estate
Investing is most focused on China, India, Australia and Japan,
said Olivier de Poulpiquet, who helps oversee $36 billion in
real estate assets as the global co-head for the unit.

In India
and China, demand is driven by strong demographic trends amid a
dearth of financing, while in Australia and Japan, low borrowing
costs are providing opportunities, he said.

Morgan Stanley, with a team of 280 globally in 11 countries
dedicated to the property business, has about 45 percent of its
investments in the U.S., 33 percent in Asia and about 22 percent
in Europe.

In many developed markets, such as U.S., Japan and
Australia, the yield spread between real estate and the risk
free rate, typically the interest rate on U.S. Treasury bills,
is as much as 400 basis points, de Poulpiquet said.

“Asia and the U.S. will continue to offer opportunities,”
de Poulpiquet said in an interview in Singapore yesterday.
“Investments in real estate have seen a flight to safety
globally and in particular in the U.S. and Europe.”

Interest in property investments by institutional investors
is improving as the asset class is viewed as an effective
portfolio diversifier and an inflation hedge, de Poulpiquet said.
Allocations to real estate by major institutions may climb from
an average of 7 percent currently to 10 percent, he said,
without providing a time frame for the increase.

India, China

In India and China, Morgan Stanley is finding opportunities
by financing developers that are seeking money to complete
projects amid a scarcity of capital, de Poulpiquet said.

In its almost three-year effort to tighten the property
market, the Chinese government has raised down-payment and
mortgage requirements, imposed a property tax for the first time
in Shanghai and Chongqing, and enacted home-purchase
restrictions in about 40 cities. India’s biggest developers have
struggled to rein in record debt as they grapple with high
borrowing costs, dwindling sales and banks’ reluctance to lend.

“The major trend in these markets is that this growth is
combined with a capital constrained environment for real estate,
mostly driven by government interventions and price cooling
measures,” de Poulpiquet said.

“In India and China, there is
less opportunity to buy existing assets but greater opportunity
to pick the right developer and build to either lease or sell.”

Favorable Demographics

India will have 127 million more working age adults by 2020,
while in China, the 470 million adults leaving rural areas for
cities will reach a rate of 11 million per year, said de
Poulpiquet.

Over the next 15 years, the total global urban space
growth will reach about 82,000 square kilometers (31,660 square
miles), 47 percent of which will be driven by India and China,
he said.

In markets such as Shanghai, the supply of class A office
spaces is relatively low while demand is forecasted to remain
robust, de Poulpiquet said. In India, the trend is similar where
the residential sector continues to offer interesting
opportunities, he said.

In Australia, distressed assets sold by European banks
which are undergoing deleveraging processes to clean up their
balance sheets are attractive, said de Poulpiquet.

“In many markets globally, including Japan and Australia
you can buy class B plus assets, at significant yield
differential between your cost of borrowing and the real estate
yield,” said de Poulpiquet. “It is a relatively safer
investment with good quality yield and return profile.”

Europe will also increasingly offer attractive investments
in real estate with all the level of distress in the market, he
said. Still, Morgan Stanley remains “cautious” and focused on
making “defensive investments” in the region as prices still
have some room to fall, he said.

“Overall, we will see slower growth, more volatility but
in Europe, it’s neither a doomsday scenario nor in a happy
recovery and this will last for a while,” he said.- Bloomberg

Tuesday, 22 January 2013

Shinzo Abe's election has pushed the Diaoyu Islands crisis into the edge of all-out confrontation between China and Japan.

While
Japan's high-profile move on the Diaoyu Islands is a direct
confrontation against its neighbor, its actions in Myanmar are a secret
detour against China.

As the Diaoyu Islands dispute gripped the
attention of China and the whole world, Japan's newly appointed Finance
Minister Taro Aso visited Myanmar to write off its debt of 500 billion
yen ($5.58 billion), followed by major financial groups covertly pushing
into Myanmar's economic field.

In fields where China is also
involved, Japanese financial groups, with their advanced technology,
strong capital and national support, are in a race with Chinese
enterprises.

They do not aim for profits at the moment, and some would rather suffer a loss.

This
is not a healthy competition, but a vicious economic war which aims to
drive out Chinese companies, control Myanmar's economy, and finally, cut
off China's energy passageway to the Indian Ocean.

Soon after
the US focused on hedging against China in Myanmar, Japan immediately
started annihilating Chinese enterprises under the umbrella of the US'
strategy.

China has three grand strategic projects in Myanmar -
the Myitsone hydropower project, which has been forced into a total
shutdown, the Monywa-Latpadantaung copper mine, where several public
protests have taken place, and finally, the construction of an oil and
gas pipeline between China and Myanmar, where recent signs have become
increasingly disturbing.

Myanmar joins sea and land in the US'
C-shaped encirclement of China, which includes the Pacific Ocean, the
Indian Ocean, East Asia and South Asia.

After the US decided on
an eastward strategic shift centered on encircling China, an East Asian
alliance, with Japan, the Philippines and Vietnam as the axis, promptly
came into being and endangered vast areas in the East China Sea and the
South China Sea.

It is a fatal threat to China, which relies
heavily on the sea for its trade and energy. Under such circumstances,
Myanmar's vital strategic position is evident, which is why the US and
Japan have concentrated on the country.

Due to the strong
US-Japan alliance, it is very difficult for China to achieve a decisive
breakthrough in the East China Sea and the South China Sea issues, while
a westward focus may be the best solution.

However, Myanmar,
one of the four westward passages, was seized initially by the US and
Japan, which have launched a strategic offensive in what seems like a
showdown posture.

Through the powerful intervention of the US
and Japan, great changes have taken place in Myanmar's political
situation, and Myanmese military forces' large-scale attack on the
Kachin Independence Army is only one event that shows this.

Thus,
Myanmar has become the arena where China, the US and Japan play out a
strategic game. We hope China can develop a proper strategy to deal with
the situation in the new century.

After the US' public announcement of its eastward strategic shift, some Chinese have given up their fantasies about the US.

A
number of Chinese have another fantasy of China uniting with Japan to
isolate the US, as Japan's national strategy aims to keep abreast with
China and the US in its politics.

But the US' usefulness is much
greater than China's, and will be for quite some time. Japan will align
with the US strategic direction in this period, rather than move closer
to China.

I suggest strategy planning departments deploy
unified strategic actions with regards to Myanmar and the Diaoyu Islands
from the perspective of the overall Sino-Japanese duel.

On the
issue of Myanmar, China should support the normal economic activities of
Chinese enterprises with State power, as Japan has done. As for the
Diaoyu Islands, China must leave Japan in a defensive position by
regaining the initiative instantly.

MEASURE twice, cut once is a term often used by carpenters and
tailors when measuring material for a specific purpose. The point is to
be very careful and judicious when measuring to avoid nasty outcomes
once the wood or material has been cut.

However, this phrase is
just as appropriate for the hiring process as well. Once an employee is
hired, the company has to ensure that the individual assimilates well
into the organisation and achieves the desired level of performance;
otherwise the remedial action that needs to be taken can be very tedious
and even unpleasant.

One of the many pitfalls of this situation
is that employers, under the pressure of filling a vacancy, could end up
hiring individuals who may not be the best fit, and as a result, could
be setting a whole series of messy events into motion.

Not too
long ago, one of my clients approached us to take on a sales director
search. The client shared that he had been a bit too hasty in hiring the
last sales director, and had failed to dive deep into the strategic
value and scope of the role before making the hiring decision.

In
our post mortem discussion with the client, it was clear that he had
hired an individual who might have been suitable for a sales manager's
position; one level below the sales director's position, but had given
him the sales director role because of urgency and the lack of suitable
candidates at that time.

The unfortunate result of that scenario
was that the newly-hired sales director resigned after only three weeks
on the job under the pressure and scope of the work, leaving a path of
chaos amongst all the company's clients and suppliers. As such, half-way
into its financial year, the company was forced to start looking for
another candidate for the sales director role.

In this instance,
the company may have benefitted from measuring twice and cutting only
once, rather than having to repeat the process of hiring for the same
position after such a short period of time.

Other than
experience, another critical-but-often-overlooked consideration in the
recruitment process is the salary range or the package offered for the
role. Salaries and wages are always moving in tandem with the demand of a
particular skill-set or type of profile. The more in demand a
particular type of skill is, the higher the cost of acquiring that
skill.

Some organisations are willing to pay above market rates
for certain key positions, as the alternative of not having someone in
the role may actually cost the organisation more, from a commercial
standpoint. On the other hand, there are some companies which would
rather keep within a certain salary band rather than pay the market rate
to an individual with the right amount of experience for the job.

From
my experience, it is essential to have not only a good understanding of
the market salaries but also what the candidate's realistic expectation
is.

If we pay too high above the market rate, this often sets a
very high expectation for this person to perform. And in some instances,
if the individual is unable to deliver the expected results, the risk
of paying an inflated price to acquire this individual might not have
paid off; and if the company had hired someone less qualified because
that was all its budget could afford, then the less-experienced
individual may also not be able to deliver on the expectation, as he or
she may not have the knowledge, capability or necessary life-experience
to do so.

Finding a solution

How can we put the measure twice cut once concept into practice?

One
innovative human resource director shared with me recently that he had
been trying unsuccessfully to fill a role in his department for quite
some time. During this period, he was introduced to an individual who
was not an ideal fit to the role in terms of experience but one who was
teachable and would be able to work well with the rest of the team.

So,
he crafted a role around the individual's profile and experience and
got the revised role approved by the top management. This worked out
well for both the company and the individual, as the expectations set
were achievable and realistic. The human resource director, in this
case, had to measure twice but only had to cut once as he managed to
find a solution to his problem. The solution turned out to be a good
one, as the individual successfully completed her probation period and
met her key performance indicators.

Another client who was
looking for a managing director for his company was also forced to take a
less conventional route to filling his needs. The client shared with me
that he had already interviewed more than 20 candidates for this role
before approaching us to assist with this search. The only candidate who
was given an offer turned down the job when he was counter-offered by
his current employer.

As such, the client already knew the market
and we were hard-pressed to come up with a new slate of candidates for
the search. The client liked one of our candidates but felt he wasn't
ready to take on the role of managing director yet. However, instead of
disregarding a good talent, the client decided to hire the individual as
an operations director.

As such, the individual was able to grow
into the managing director's role and the company would also have the
benefit of securing a good talent who could potentially achieve more for
the company in the future.

In this example, our client knew
exactly what he needed for the role and exercised some flexibility to
acquire good talent rather than missing out on a high-potential
candidate. In addition, he did not compromise on his requirements but
was able to see beyond the immediate need to find a managing director.

Different approach

When
to measure and when to cut? An important aspect of measure twice cut
once, is that the person doing the measuring needs to take the time to
get it right and not be in too much of a hurry to get to the cutting
stage. A carpenter or tailor is a craftsman who takes pride in his work.
Therefore, when we hire, it is essential to look carefully at all
aspects of the role which needs to be filled and take the time to
understand how a potential candidate will fit that role.

The
technical expertise or hard skills are only one part of the whole
equation. We should take the time to understand the personality profile
of the individual, his or her motivations and long-term goals.

Most
hiring managers often forget to look at options in the recruitment
process. There is a finite pool of talent and the best talents would
also have been earmarked by your competitors as well.

So, instead
of doing the same thing and expecting a different outcome, perhaps it's
worth the effort to try a different approach. Tailor the job to fit a
good talent, or give the person another role to allow time for the
individual to grow into the intended position. Although we may not
always have the option of changing the status quo in this way, the
purpose of this article is to offer another alternative solution to the
talent shortage problem, and hopefully, bring about a better outcome.

Talking HR with Pauline Ng

Pauline Ng, consulting director and head of BTI Consultants, encourages
every hiring manager to explore all options and leave no stone unturned
when making the decision to hire by utilising assessment tools and
having a comprehensive map of the talent market.